The capacity crunch is starting to take hold of the shipping industry. The onslaught of tropical storms, hurricanes and an expected, record-breaking holiday shopping season spell C-A-P-A-C-I-T-Y C-R-U-N-C-H. However, this capacity crunch is likely to exceed even the worst capacity crunches in history, says Karen Sage of Talking Logistics With Adrian Gonzalez. Yet, shippers can turn their fears into opportunities; they can continue thriving in a capacity crunch by following these steps.
1. Know the Causes Is the Starting Point to Thriving in a Capacity Crunch
Every capacity crunch may have similar causes, like lackluster job growth among truckers or increased shopping. However, all crunches have time-specific causes as well, and this time, Hurricane Harvey, Irma, and Maria are to blame for a significant part of it. Shippers should take time to learn more about the causes of the current and past capacity crunches and divert resources to avoid the issues. For instance, shippers using lanes in Hurricane-affected regions may want to consider outsourcing shipping to a non-affected carrier that has more availability than local carriers.
2. Expand Your Carrier Options
The next step to thriving in a capacity lies in expanding your carrier network. Stop wasting time waiting on your preferred carrier, and take advantage of the freight availability of all carriers. Furthermore, more carrier options is essential to landing better contracts with existing carriers when it comes time to renew or renegotiate your contracts, reports Averitt Express.
3. Optimize Routes, and Consolidate Freight Where Possible
An optimized route is the fastest way to move product, and consolidating parcels and less-than-truckload shipments into full truckloads is an excellent way to overcome the pitfalls of a capacity crunch. Since optimizing requires a detailed analysis of the factors impacting a given lane or route, it may be necessary to use a route-optimization software. Alternatively, consider purchasing or subscribing to a software-as-a-service, like the Cerasis Rater, which is an all-in-one transportation management system (TMS).
4. Use Technology That Benefits Your Company
Technology brings us to the next step, implementing new technology that automates shipping and benefits your company. When your carrier has less work to do to make a shipment ready, the carrier is more likely to give priority to your shipments. Therefore, you can take advantage of available capacity before your competitors.
5. Focus on Service, Not Just Freight Rates
Implementing technology is only half the battle. Ensure technology pairs well with value-added services and other benefits to working with it. While a carrier may offer the lowest rates, consider the ease-of-use of the carrier’s technology. If the system does not perform as expected, it could end up costing more than you anticipated.
6. Go “Green.”
Increasing fuel costs are another driving force common to capacity crunches, and going “green” with sustainable practices in both shipping processes and your fleet can reduce costs and help free capital for investing in other parts of your supply chain that may endure higher freight rates.
7. Pay and Treat Your Drivers Well
Even if using sustainable practices, you still need drivers. With the tightening driver shortage, drivers have the upper hand, and if you pay lower wages or fail to treat them properly, they will abandon ship. Pay a realistic wage, and stay in tune with national driver averages, reports Dustin Braden of the Journal of Commerce (JOC).
8. Attract New Talent to Your Logistics Team
Your logistics team should also evolve during a capacity crunch. The days of standard operations will be insufficient to overcome the challenges of a capacity crunch, so consider retraining staff or hiring new personnel to help transition to new systems and procedures that save money and time during a capacity crunch. This will translate into savings for your customers and less headache for your carriers.
9. Step Outside Your Shipping Comfort Zone
Shippers tend to become relaxed and comfortable with a specific mode of shipping. This is the shipping comfort zone, and it cannot endure a capacity crunch. Consider multimodal shipping options, which are often a pre-requisite to freight consolidation programs too. Moreover, having an open mind about trying new carriers and shipping modes will lead to accessing more of the potentially available shipping capacity.
10. Partner With an Experienced 3PL
Trying to manage these steps can be a complicated process, and a failure of any step could lead to a cascading series of consequences that make the capacity crunch seem impossible to survive. Therefore, consider partnering with a third-party logistics provider (3PL), like Cerasis, to help you see the opportunities within the capacity crunch.
Turn the Capacity Crunch Into a Cost-Saving Opportunity
The current capacity crunch shows no signs of give, and another capacity crunch will always be on the horizon. However, a capacity crunch does not always mean bankruptcy will be at your door and thriving in a capacity crunch is possible. Turn the gloomy outlook of a capacity crunch into an opportunity for even better growth, competitive advantage, sustainability and scalability by following these tips today.